Central Bank Shenanigans

In May the Congressional Budget office (CBO) updated its 10-year fiscal estimates for federal revenue, spending, and annual deficits through 2029. The CBO is a non partisan agency tasked with analyzing data to provide Congress estimates for GDP growth and the impact on government spending and revenue from changes in tax laws. As the Summary notes the outlook for the next 10 years and beyond is not good and the long term fiscal health of the U.S. economy is projected to weaken. “Revenues and outlays are both projected to rise through 2029, but the gap between them is projected to persist, resulting in large deficits and rising debt. According to CBO’s estimates, the $896 billion deficit now projected for 2019 would grow to $1.3 trillion by 2029. Relative to the size of the economy, the deficits that CBO projects would average 4.3 percent of GDP over the 2020–2029 period. Other than the period immediately after World War II, the only other time the average deficit has been so large over so many years was after the 2007–2009 recession. Over the past 50 years, deficits have averaged 2.9 percent of GDP.”